Source from (The Star Online): http://biz.thestar.com.my/news/story.asp?file=/2012/5/4/business/11225434&sec=business
Published: May 04, 2012
It plans to take advantage of Bank Negara’s RBC framework implementation
Group managing director Datuk Mohamed Hassan Md Kamil said the RBC framework for takaful operators would be in place by the end of next year.
“By then, takaful operators that do not meet the minimum capital requirement would either have to inject more capital or consolidate. If there is a suitable partner, merging would be an option we will definitely explore in the future. This is because growing organically can take some time.
Hassan: ‘Growing organically takes time.’
“So in the long term, once the RBC framework is in place, some companies would have to merge to gain competitiveness and economies of scale,” he told reporters after the company AGM yesterday.
It was reported that Bank Negara had issued a concept paper on RBC framework for takaful operators in April last year.
As of December 2011, Takaful Malaysia was the second largest operator in Malaysia with a market share of about 25% behind Etiqa Takaful that controlled about 41% of the market.
Hassan said the consolidation was currently more on the conventional insurance business as its RBC framework was already launched. “We envisioned to be the number one takaful operator in two to three years time.
“Although we are in the second place in Malaysia now, we are a leader in the non-motor general takaful business with a 32% market share and we are also a leader in group family takaful business with market share of 33%,'' he said.
He added: “We are quite selective in the segments that we wanted to be leaders. For example, we do not want too much of the motor business because the volatility of the claims.”
Takaful Malaysia, according to Hassan, has allocated RM15mil to improve its information technology infrastructure to enhance its service level. The company is also looking to open six more takaful myCare centres in Malaysia this year.
On its Indonesian operations, Hassan said growth of the industry was restricted as the Islamic insurance framework there was not as structured as it was in Malaysia.
“The takaful business there still can operate on window basis where it is just another product in the general insurance business. So, it's not a level playing field for us there because we are a stand-alone company.
“Nevertheless, I heard that the window-based takaful business there might have to close up in three years to be stand-alone business,” he said, adding that Indonesia's operations contributed less than 5% to the company's earnings last year.
Hassan said the company was waiting to see more stability the regulatory framework before deciding to invest more.
“We heard that Bank of Indonesia plans to impose new caps on single-shareholder stakes in commercial banks as early as this month. We hope that regulations there would be streamlined soon so that we will be in position to capture a larger share of the market there,” he said.
On the company's performance, Hassan said he was positive on its soon-to-be-announced first-quarter ended March 31 results.
Takaful Malaysia's profit after tax and zakat rose by 98.4% to RM76.4mil for the financial year ended Dec 31, 2011 from a year earlier. It boasts group assets of RM5.9bil.
At the AGM, shareholders approved a final dividend of 10% single-tier for the financial year under review amounting to RM16.3mil.
Hassan said the company's share price had risen from RM1.39 to RM3.96 over the past 12 months.
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